EUR/USD showed little reaction to mixed PMI, ECB decision in focus

The euro reacted slightly against the US dollar on Thursday, following the series of mixed PMI, released out of Euro zones largest economies, while investors eyed the upcoming statement on policy by the European Central Bank.

EUR/USD reached a new session low at 1.3227 at 8:26 GMT, after which the pair consolidated at 1.3247, down by 0.42% for the day. The key point at 1.3250 became the new resistance level for the pair, while the next support level was expected to be at 1.3180.

Earlier on Thursday Markit research group reported that activity in the sector of manufacturing in the Euro zone marked an increase for the first time in two years in July, which suggested that the region may see the end of recession during the current quarter. The final manufacturing PMI in the single currency bloc rose to 50.3 in July, above the estimated reading of 50.1, as in June this index stood at 50.1, a revision up from 48.8 previously. Euro regions PMI entered the zone pointing expansion for the first time since July 2011. This result came in consonance with the data, released out of the first four largest economies in the common currency zone, where manufacturing activity showed slight improvement in July.

Final Manufacturing PMI in Germany came in at 50.7 in July, up from 50.3 in June, while preliminary estimates pointed that the index will remain unchanged. French Final Manufacturing PMI, on the other hand, ticked down in July to a reading of 49.7 from 49.8 a month earlier, remaining in the contraction zone. Manufacturing PMI in Italy managed to surpass the critical level of 50.0, which divides contraction from expansion, standing at 50.4 in July, surprising projections of a lesser improvement to 49.7, as in June the index pointed a value of 49.1. Spanish Manufacturing PMI also remained in the contraction zone in July, showing a value of 49.8, down from 50.0 in June, while expectations pointed an advance to 50.6.

The sentiment on the euro remained frail ahead of the conclusion of European Central Banks two-day meeting on policy, followed by ECB President Mario Draghis press conference. Analysts expect that the central bank will leave its monetary policy intact, as todays series of economic data from the common currency bloc also pointed in that direction. EUR/USD lost about 70 pips following the FOMC decision on policy yesterday and ahead of the anticipated ECB meeting outcome.

Elsewhere, the euro lost ground against the British pound as well, with EUR/GBP pair tumbling 0.45% for the day to trade at 0.8710 at 9:33 GMT. On the other hand, EUR/JPY cross was still on positive territory for todays session, trading at 130.73 at 9:35 GMT, marking a 0.38% daily advance.